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Shakedowns at Customs: no longer business as usual

SEVERAL years ago, Rebecca (‘Riv’) Goldman – who at the time was vice-president of law, for a major US manufacturing company – kept hearing from the field that shipments were getting stuck in Customs in the Philippines, writes Alexandra Wrage (below,right), president of Annapolis, USA-based anti-corruption business association TRACE International.

Riv was committed to her company’s zero-tolerance policy on bribery and a longstanding TRACE member. She had assured her team for years that it is possible to do business anywhere without paying bribes. It takes creativity and tenacity. The bribe-takers have to believe you’re serious in your resistance, but once they do, they move on to easier targets.

Riv tells the story: “There was an ‘undercover’ show on local television that had exposed bribery in the Customs bureau in Manila, so everyone in our local office was on guard. When I arrived, and said I wanted to accompany our broker to walk our goods through, I was told I couldn’t. When I objected, I was left standing at the curb for half an hour, but I was finally allowed in. The ‘big’ manager of the office told me she would accompany me through each of the stations. She stayed with me for the first station – about 10 minutes. I kept smiling. Then we went to the next station. Another ten minutes. The manager eventually understood that I intended to stop at every station, which would take most of the day. It wasn’t how she planned to spend her time, so she excused herself and went back to her office. There were over 20 stations and our paperwork had to be stamped and checked at each one. But… no bribes were paid.”

Bribery in Customs procedures remains a challenge for air cargo companies

“I have heard speakers at conferences say authoritatively that no goods have ever passed through Manila without the payment of a bribe. That simply isn’t true.”

Alexandra Wrage, president of Annapolis, USA-based anti-corruption business association TRACE International

It’s possible that Riv’s company was one of few exceptions, but we at TRACE have heard of others who have made it so awkward or tedious to solicit a bribe that local Customs officials simply give up.

Riv’s anecdote underscores how important it is to have a strategy to navigate highly corrupt markets. Not all companies will be able to spare a senior lawyer or compliance professional to travel internationally and camp out at the Customs facility, but the most powerful anti-bribery tool in a company’s possession is a genuine commitment to transparent and clean business practices.

That commitment has to be effectively broadcast to port and Customs officials, competitors, customers, and other players in the industry. Companies can reduce their exposure to bribery by ensuring that their staff are trained on the company’s anti-bribery policy and are consistent in their interactions with Customs and port officials.

All of this is simpler when a majority of actors in the market support the same strategy. As more companies readily reject bribe requests, the more leverage each company has. Industry initiatives composed of Customs and business representatives – ideally with the participation of civil society – will go a long way towards supporting ethical behaviour in the air cargo industry.

Technology is also an excellent tool to increase transparency and reduce opportunities for public officials to seek payments in the Customs process, making importing more efficient and less vulnerable to bribe demands. As governments remove the personal element from transactions through automation, they’re finding that the opportunities for bribe demands decrease.

In particular, e-Customs can shield companies from extortionate demands in challenging markets –as long as officials are not able to circumvent the system. When Afghanistan launched its e-Customs project in 2004, the country reported an initial increase in efficiency and transparency with respect to manifests and Customs declarations. Gradually, however, those seeking to do wrong were able to find ways around the system. On the other hand, the government of Dubai appears to have had considerably more success with its e-Clearance programme.

Bribery in Customs procedures remains a challenge for air cargo companies. But companies are increasingly flexing their compliance muscles. They’re less willing to pay, more vocal in their demands for automated alternatives that reduce face-to-face shakedowns, and more comfortable collaborating with other good actors in the industry.